Shares of L Brands, Inc. (LB) hit a 52-week high of $86.08 on Dec 26, 2014, eventually closing the session at $85.55. The stock has surged roughly 45% year-to-date, and the company’s long-term earnings per share growth rate stands at a healthy 12.2%.
L Brands’ Victoria's Secret and Bath & Body Works indisputably possess strong brand loyalty, which helps the company to command a market-leading position in the lingerie, personal care and beauty segments. We believe the company’s innovation in merchandise and exclusive assortments remains popular among consumers, setting it apart from its peers.
Moreover, the company’s focus on adding the entire PINK and lingerie assortments at its Victoria’s Secret stores and the in-store product launches at Bath & Body Works consolidated L Brands’ position as a winner this holiday season.
We are optimistic about the company’s operational efficiencies, together with its new and innovative collections that augmented sales. L Brands stressed the importance of the short cycles by effectively maintaining a high inventory turnover, which allowed it to remain adapt well amid volatile macroeconomic conditions.
Additionally, the company’s expansion in international markets is likely to provide long-term growth opportunities as these stores continue to generate incremental sales volumes..
This Zacks Rank #2 (Buy) company reported robust third-quarter 2014 results in November, wherein both the top and the bottom line grew on a year-over-year basis.
The company’s success story is also supported by its positive earnings surprise history. In the trailing seven quarters, the company’s earnings have surpassed the Zacks Consensus Estimate by an average of 5%, including a commendable 10% beat in the last concluded quarter.
Third-quarter earnings of 44 cents per share surpassed the Zacks Consensus Estimate of 40 cents and also surged 42% from the prior-year quarter on the back of higher sales. Net sales also increased 6.8% to $2,318.9 million from $2,171.1 million reported in the prior-year quarter.
L Brands continues to revamp its business by improving store experience, localizing assortments and enhancing its direct business. We believe that these measures will help it generate incremental sales and increase store transactions on the back of a higher conversion rate.
Apart from L Brands, Target Corp. (TGT), The Hain Celestial Group, Inc. (HAIN) and Whirlpool Corp. (WHR) also hit their respective 52-week highs of $75.37, $118.66 and $194.46, on Dec 26.
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